Multinationals and cash holdings

Fernandes, Nuno; Gönenç, Halit

doi:10.1016/j.jcorpfin.2016.06.003

Cited by 60 publications

(29 citation statements)

References 45 publications

Supporting

Mentioning

Contrasting

Unclassified

Order By: Relevance

“…Based on the diversification argument, conglomerates have better access to internal capital markets, lower costs for the conversion of assets into cash, better investment opportunities, and higher agency costs than firms that are focused on a specific target (Bakke & Gu, ; Fernandes & Gonenc, ; Subramaniam, Tang, Yue, & Zhou, ; Tong, ). Hence, diversified firms hold less cash than focused firms over time (Subramaniam et al, ) and on average maintain a large and persistent cash differential compared to focused firms from 1990 to 2013 (Bakke & Gu, ).…”

Section: Approaches Regarding Cash Holdings: a Brief Overviewmentioning

confidence: 99%

What Do We Know About Corporate Cash Holdings? A Systematic Analysis

Cruz¹,

Kimura²,

Sobreiro³

2019

J Corp Accounting Finance

View full text Add to dashboard Cite

Cash holdings play an important role at the heart of firms' policies. Researchers have devoted considerable attention to the dramatic increase in cash reserves despite alternative instruments such as debt, derivatives, and credit lines. The finance literature discusses the antecedents and determinants of cash holdings as well as the different reasons for firms to hold cash. In this paper, we present a systematic literature review of cash holdings in the finance field. The major studies in this area are classified and coded, and a research agenda and recommendations that may advance the field are discussed. © 2019 Wiley Periodicals, Inc.

show abstract

Section: Approaches Regarding Cash Holdings: a Brief Overviewmentioning

confidence: 99%

What Do We Know About Corporate Cash Holdings? A Systematic Analysis

Cruz¹,

Kimura²,

Sobreiro³

2019

J Corp Accounting Finance

View full text Add to dashboard Cite

show abstract

“…This corresponds to the precautionary motive for holding liquid assets. A firm that is geographically diversified has more diversified sources of revenue and therefore needs to invest less in liquidity (Fernandes and Gonenc, 2016). Additionally, when the firm uses its internal resources, it incurs lower transaction costs, and it is also able to develop its business capabilities and expertise which become valuable intangible assets to the firm (Lins and Servaes, 2002).…”

Section: Literature Review and Hypotheses Developmentmentioning

confidence: 99%

“…However, studies have so far only looked at the cash holdings problem but none have investigated the relationship between corporate diversification and the non-cash working capital aspect of liquidity. Second, although previous studies have investigated how cash holdings are affected by the diversification strategy of a firm (Atanasova et al, 2015;Fernandes and Gonenc, 2016;Pinkowitz et al, 2012;Tatsuo, 2016;Wu et al, 2017), in most cases it has been assumed that the relationship is monotonous. Prior studies that have highlighted various motives for firms to hold liquid assets such as the precautionary, transaction, tax and the agency cost motives, have found the motives to vary at different levels of liquidity.…”

Section: Introductionmentioning

confidence: 99%

Geographical diversification and corporate liquidity in Malaysia: a quantile regression approach

Wasiuzzaman

2020

PAR

View full text Add to dashboard Cite

Purpose This paper aims to examine the effect of geographical diversification on corporate liquidity in Malaysian firms. Liquidity is represented by both cash and working capital. Design/methodology/approach Data for this study is collected from a total of 735 firms over a period of five years, from 2010 to 2014, resulting in a total of 2,904 firm-year observations. The effect of geographical diversification on the cash and working capital of the firms is analyzed by using the ordinary least squares (OLS) with standard errors adjusted for firm level clustering and the quantile regression (QR) analyses. Control variables which represent the characteristics of the firms are also considered. Findings Analysis using the OLS regression technique indicates that geographical diversification has a highly significant positive influence on corporate cash holdings, while the influence of working capital is negative and its significance is only at the 10 per cent level. However, when QR is used to analyze the relationships, it is found that geographical diversification is only significant in positively influencing cash holdings for firms with low cash holdings, but the relationship is insignificant at high levels of cash holdings. Additionally, working capital is significantly influenced by geographical diversification at high levels of working capital but not at low levels. Originality/value To the author’s knowledge, this is the first study to analyze the influence of geographical diversification on liquidity by considering both cash and working capital. The effect of diversification on liquidity is mostly studied in developed countries, whereas this study is focused on a developing country. Additionally, this study uses QR to analyze relationships at different levels rather than at aggregate level as done in OLS regression analysis.

show abstract

“…The stock market is negatively affected by government instability and uncertainty in the country, such as terrorist attacks, judicial crises and assassinations. In their study, Fernandes and Gonenc (2016) also use the index of political stability and the absence of violence in relation to international portfolio diversification. The authors concluded that political stability increases the trade-off between geographic and industrial diversification.…”

Section: Introductionmentioning

confidence: 99%

Utilization of Artificial Intelligence for Sensitivity Analysis in the Stock Market

Janková

Dostál

2019

Acta Univ. Agric. Silvic. Mendelianae Brun.

View full text Add to dashboard Cite

The main contribution of this paper is to perform sensitivity analysis using artificial intelligence methods on the US stock market using alternative psychological indicators. The Takagi-Sugeno fuzzy model applies investor sentiment represented by VIX index and monitors the impact of economic optimism, political stability and control of the corruption index on the S&P 500 stock index. Alternative psychological indicators have been chosen that have not been explored in the context of stock index performance sensitivity. Investors primarily use fundamental and technical analysis as a source to determine when and what to buy into an investment portfolio. However, psychological factors that may indicate the strength of reaction to the market are often neglected. Fuzzy rules are determined and tested using a neuro-fuzzy inference system and then the rules are reduced by fuzzy clustering to improve performance of ANFIS. The membership function is defined as a Gaussian function because it has the least RMSE value. The sensitivity analysis confirmed that there is a significant impact of the political stability index and the economic optimism index on the S&P 500 performance. Conversely, the sensitivity analysis, unlike the previous study, did not confirm the strong impact of VIX on equity index performance. Results indicate that incorporating psychological indicators in macroeconomic models leads to better supervision and control of the financial markets.

show abstract

Multinationals and cash holdings

Cited by 60 publications

References 45 publications

What Do We Know About Corporate Cash Holdings? A Systematic Analysis

What Do We Know About Corporate Cash Holdings? A Systematic Analysis

Geographical diversification and corporate liquidity in Malaysia: a quantile regression approach

Utilization of Artificial Intelligence for Sensitivity Analysis in the Stock Market

Contact Info

Product

Resources

About